North East SMEs losing out on R&D tax relief

New analysis shows London dominates in successful applications

Anthony Devlin/PA Wire A collection of coins
A collection of coins

SMEs in the North East are losing out to other UK regions despite a remarkable surge of more than a quarter in claims for research and development (R&D) tax relief, according to Jumpstart, a specialist in the subject.

Analysis by the Edinburgh-based company of the latest HMRC figures for 2012/13 - which record a 30% jump in the number of SME claims - shows that enterprises in London successfully claimed 17 times the value won back by North East-based companies.

Businesses in London, which proportionally should have 13% of claims, netted 17% of successful applications and 31% of the financial benefits paid out by the scheme, which is designed to foster innovation.

The impact of 30% increase in SME claims was also tempered by the fact that the overall sums returned by HMRC rose by 13.1% and significant differences remain between different parts of the UK.

The South East had a disproportionate number of claims and the East of England - with just 7% of the population - claimed more than the North East, Scotland, Wales and Northern Ireland put together.

Simon Fisk, business analyst for Jumpstart in the North East, said: “There is no doubt that awareness of the government’s existing relief programme is increasing.

“The 30% increase in the number of SME claims has to be because of a better understanding of the scheme by companies and their advisors.

“However, companies in the North East are not reaping the full benefits which might be expected to accrue to them on a head of population basis. There is great scope in the region for a much more focused uptake of the scheme.

“Many companies in the North East have made significant gains following successful applications to HMRC by Jumpstart, but many more could achieve returns which can often be game-changing for smaller innovative concerns.”

Robert Cope of Jumpstart
Robert Cope of Jumpstart
 

The smaller rise in money returned by HMRC is explained by the fact that, while the value of SME claims rose by 39.5%, large company value declined by 1.6%.

Since its inception, Jumpstart has helped its clients recover more than £43m in R&D tax relief and has identified more than £225m in R&D expenditure.

It has achieved a claim success rate of 98.9%.

Jumpstart last month secured the services of a highly-rated and hugely experienced business expert to further enhance its industry-beating business analysis capability.

It has appointed Robert Cope, veteran of PwC, IBM, DEC and Omnicom, to head its business analysis push into the exciting new technology clusters growing out of the rust-belt areas from North East England to Yorkshire and the Humber.

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